Working Capital
Editorial Team
At Working Capital, we believe access to funding should be simple, transparent, and designed around your business not the other way around. We’re committed to helping entrepreneurs make smart financial decisions with tools, guidance, and lending partners they can trust.
Every business can benefit from additional capital at times, whether to support growth, manage cash flow, or take advantage of new opportunities. The challenge is knowing where to find financing that aligns with how your business earns and spends money when those moments arise.
The right solution can look very different depending on the type of business seeking funding. A company with predictable recurring revenue may benefit from a financing model built around future growth, while a business generating daily sales may prefer an option tied directly to its payment activity. Understanding how working capital financing companies evaluate businesses and structure repayment is key to finding the right fit.
Arc and PayPal take fundamentally different approaches to business financing. PayPal’s lending products are built around its payment ecosystem, making them closely connected to merchant sales activity. Arc focuses on providing capital to high-growth companies with recurring revenue models, offering a financing approach designed around predictable subscription-based revenue.
Arc provides working capital that allows eligible businesses to access financing based on their current financial performance and expected future revenue. While the platform has traditionally been associated with SaaS and other recurring-revenue companies, Arc’s financing is available to a broader range of businesses that demonstrate sufficient revenue and financial strength.3
Instead of relying only on traditional application documents, Arc connects with a company’s financial systems to review current business performance. Businesses can link their accounts within minutes, and Arc states that most financing decisions are provided within approximately 48 hours. Businesses with an Arc account may get access to funding as quickly as the same day.3
To qualify, businesses must meet the eligibility requirements for this business cash advance company. These requirements include showing $250,000 or more in annual revenue, doing business as a U.S.-based company, maintaining sufficient cash reserves to support repayment obligations, and using a U.S. bank account.3 Arc evaluates each company individually, meaning available financing depends on the business’s financial profile rather than a single universal funding limit.
Arc states that working capital generally does not exceed 10% of a company’s revenue.3 Its revenue-based financing guidance also explains that advances may be structured as a percentage of ARR. Some new customers may receive 20%–50% of ARR in funding while more established clients could potentially qualify for higher percentages. For eligible businesses, Arc may provide up to $5 million in funding.2
The financing is structured as a non-dilutive alternative to equity funding, allowing founders to access capital without giving up ownership. Arc provides the cost of financing upfront before acceptance and states that its financing does not include hidden fees or prepayment penalties.3
Businesses that process payments with PayPal may qualify for PayPal Working Capital, a merchant cash advance loan (MCA). Businesses can access anywhere from $1,000 to $200,000 through PayPal Working Capital, and those who borrow again may be eligible for funding up to $300,000. Once approved, funds may be available in minutes within a PayPal merchant’s account.7
Repayment is tied to sales activity. PayPal automatically deducts a fixed percentage of daily PayPal sales, allowing payments to fluctuate with revenue. Merchants only make payments when they generate PayPal sales, meaning no PayPal sales means no payment is collected that day. While there is no set repayment term, borrowers must repay a minimum of 5–10% of the outstanding balance every 90 days.7
PayPal Working Capital uses a fixed-fee pricing model, with the total repayment amount disclosed upfront before accepting the offer. Because repayment is fixed, paying off the balance early does not reduce the total amount owed. PayPal does not charge interest or late fees.7
Eligibility is based on PayPal account activity rather than traditional lending requirements. Businesses must have a PayPal Business or Premier account with at least 90 days of history and sufficient PayPal sales volume, typically $15,000 in annual PayPal sales for Business accounts and $20,000 for Premier accounts.7
An application for Working Capital does not include a personal credit check or personal guarantee, and businesses across industries may qualify as long as they meet PayPal’s requirements and process eligible sales through the platform. However, PayPal Working Capital is currently not available to businesses in North Dakota or South Dakota.7
Arc does not offer a traditional business loan product. Instead, the company focuses on providing growth capital through other financing solutions, including its corporate card and revenue-based financing options. Arc’s financing products are designed around flexible access to capital and repayment structures that align with a company’s cash flow.
For businesses looking specifically for a conventional term loan with a fixed loan amount and consistent payments, Arc is not a direct fit. Arc’s offerings are primarily designed for venture-backed startups and high-growth companies that need flexible working capital to support expenses such as hiring, marketing, software, and operations.
The PayPal Business Loan works like a traditional short-term working capital loan. Approved borrowers receive a set amount of funding upfront and repay it through fixed weekly payments over 17–52 weeks. Eligibility requires a PayPal Business account, nine months of business history, and at least $33,300 in annual revenue.8
Loan amounts range from $5,000 to $200,000 for first-time borrowers, with repeat clients potentially eligible for up to $300,000. Repayment terms typically range from 17 to 52 weeks (approximately four to 12 months), and borrowers repay the loan through scheduled weekly bank withdrawals.8
The loan also follows a fixed-fee structure, with the total cost established when the offer is provided. The fee does not change based on repayment behavior, and PayPal does not charge interest or prepayment fees. PayPal only performs a credit check after a borrower accepts a loan offer, not at the time of application.8
PayPal Business Loans are available across a wide range of industries. Currently, PayPal Business Loans are not accessible to businesses in North or South Dakota.8
Arc is designed to support more than just a company’s financing needs. Businesses with significant cash reserves can use Arc’s treasury tools to earn interest on the balance, helping startups make better use of excess cash while they manage growth, extend their runway, or plan their next financing milestone.5
The platform also brings day-to-day financial management into one place. Companies can issue physical and digital cards, keep track of spending, and set controls for employees who need access to business funds.4 By integrating banking features with financing solutions, Arc gives startups a centralized platform for managing more of their financial operations.
The Arc Card is a corporate spending tool available to Arc customers that allows businesses to issue virtual and physical cards for employees and team members. Companies can manage spending directly through Arc’s platform by setting card limits, monitoring transactions, and controlling access across their organization.4
By integrating card management with Arc’s broader financial platform, businesses can simplify expense oversight and give teams access to company funds while maintaining visibility into spending activity.
The PayPal Business Debit Mastercard gives eligible PayPal Business account holders direct access to their PayPal balance for business purchases, without needing to transfer funds to a separate bank account first. Unlike a business credit card, it does not provide a revolving credit line; spending is limited to available PayPal funds.10
The card includes business-focused features such as employee cards, spending controls, and unlimited 1% cash back on eligible purchases.6 However, it is not a standalone business banking product with traditional checking features, so businesses seeking a full banking platform would need to combine PayPal with additional financial providers.
Arc and PayPal both provide access to non-dilutive loans for small business owners, but they are built around different approaches to financing. Arc focuses on companies with recurring revenue models and growth-oriented needs, using business performance and financial data to structure funding around a company’s future revenue potential. PayPal’s financing options are more closely tied to its payment ecosystem, making them a natural extension for merchants already processing sales through the platform.
The differences go beyond eligibility, though. Arc offers a broader financial platform that combines working capital, business banking tools, and corporate spending features designed for growing companies. PayPal provides financing options that range from sales-based advances through Working Capital to fixed-payment Business Loans, giving merchants flexibility based on how they prefer to repay capital.
Ultimately, the right choice depends on the business itself and the type of support it needs. Companies with recurring revenue and growth-focused financing needs may find Arc’s approach aligns with their operating model, while businesses that already rely on PayPal for payments may value the convenience of financing connected to their existing sales activity.
1https://joinarc.com
2https://www.joinarc.com/guides/revenue-based-financing
3https://www.joinarc.com/working-capital
4https://www.joinarc.com/business-account
5https://www.joinarc.com/treasury-management
6https://www.paypal.com/us/cshelp/article/what%E2%80%99s-the-paypal-business-debit-mastercard%C2%AE-and-how-do-i-apply-help504
7https://www.paypal.com/us/business/financial-services/working-capital-loan
8https://www.paypal.com/us/business/financial-services/small-business-loan
9https://www.paypal.com/workingcapital/faq
10https://www.paypal.com/us/business/financial-services/debit-card
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